The government plans to set up AC charging points at $50 per unit to address the issue of range anxiety. Affordable EV charging points across the country could kick-start demand. India’s shift to EVs over the next decade could have a major impact on the global oil market as it is the world’s third largest importer of crude.
The old chicken and egg problem that has bedevilled the growth of the Indian electric vehicle (EV) sector could soon be addressed. Just as scientists have determined that the egg came first and then the chicken, the government of India has decided to incentivise the setting up of EV charging infrastructure to push the growth of EVs in the country.
This will address the issue of range anxiety that many people felt. The fear that their vehicles would run out of charge (leaving them stranded) is a major factor hobbling the sale of EVs in India. The reason: Lack of adequate charging infrastructure.
But setting up charging infrastructure across the length and breadth of even cities like New Delhi or Mumbai will cost a pretty packet. Investors are wary of putting the money upfront unless they are assured of a minimum level of demand, which current levels of EV sales cannot guarantee.
That is why the recent announcement by the government that it is planning to roll out AC charging points for electric vehicles over the next couple of months at an extremely affordable $50 per point.
This is expected to kickstart heightened demand for EVs, especially two-wheelers and three-wheelers, according to a committee, which included officials from the government as well as representatives of EV manufacturers and suppliers. It was this committee that recommended the setting of these charging points.
“The group had set a target price of less than ₹3,500 ($50) for a smart AC charge point operated with a smartphone, for a global breakthrough in affordable EV charging infrastructure. Fast-track development of the standard, close working between industry and government, and diligent testing and validation has met with success,” the government statement said.
The price point of $50 per unit of charging point is less than half of what these units for two-wheelers and three-wheelers cost anywhere in the world. Just as mobile phones, and not laptops and tablets, drove India’s adoption of the Internet, experts feel it will be two-wheelers and three-wheelers, and not four-wheel cars, that will herald the dawn of the EV age in India. This is yet another example of India’s frugal engineering skills finding a solution to an urgent problem.
“By 2025, forecasts expect up to 4 million of such vehicles (EV) could be sold each year, growing to almost 10 million by 2030. Any charging solution to serve this sector must be highly scalable, easily accessible by public; it should support interoperability, and be affordable,” the government statement added.
The India Electric Vehicle Ecosystem Market Outlook 2030 published by global market research firm Research and Markets says India’s EV market is “anticipated to grow at a robust CAGR of 43.13 per cent during the forecast period from 2019 to 2030”.
It forecasts that installation of charging infrastructure will expand in tandem with the EV market at a CAGR of 42.38 per cent during this period.
However, for this to happen, India will have to invest heavily in EV manufacturing including relatively sophisticated machinery like electric motors, micro-controllers and telematics hardware, besides the latest generation of rechargeable batteries and its components. Failing this, experts said, India will add one more item on which it will be dependent of China. The projected annual bill on imports of EV components and allied equipment alone could be $50 billion.
India’s target of converting 30 per cent of its motorised vehicle fleet to EVs is considered achievable. If the country can pull it off, it will have a major impact on the global energy market.
India is currently the world’s third largest oil consumer (fourth largest if EU is considered as a bloc) and also the third largest importer of crude, accounting for 9.7 per cent of global supplies in 2020.
If a large part of India’s automobile fleet shifts to electric power (batteries), this will seriously impact the global demand-supply and pricing scenario for oil. The exact magnitude of the impact has not been calculated but according to a senior industry executive, it will be substantial.
Thus, India’s shift to EVs will be closely watched by countries as far apart as the Middle East oil producers and China and could emerge as another point of contention in their battle for geo-strategic brownie points.